Imported Cars and the Democrats

December 8, 1980

THE CONGRESSIONAL Democrats seem to be sliding rapidly into an opposition party's frame of mind. You can see it in the House's overwhelming vote for the automobile imports resolution, followed by the Senate Finance Committee's prompt support for it. In the committee's vote on Thursday, the only dissenters were two dismayed Republicans.

The automobile imports resolution is poison. It promises nothing but protectionism and higher inflation. Most of the people in Congress understand that perfectly well. As long as the Democrats were fully in charge, they were admirably firm in defending open markets and competition. But power is now shifting from one party to the other. A lot of the Democrats have evidently begun to wonder why, in that case, they should continue to make themselves unpopular with Detroit. Is it not more convenient, not to say more amusing, to pass bad trade legislation and let the Reagan administration then try to deal with the auto workers?

The Carter administration managed to stave off this kind of bill, over the past year, by directing all complaints about imported cars to the International Trade Commission. The United Auto Workers and the Ford Motor Co. spent the summer there, pursuing their claims for limits on the Japanese imports, but last month the ITC decided against them. In response to that decision, both the union and Ford are now pressing Congress for legislation specifically authorizing the president to negotiate import restrictions with the Japanese. The Carter administration has said that it won't actively fight the resolution, but neither will it begin negotiations in the short time left to it. If the Senate now passes the resolution, that will leave the question squarely with Mr. Reagan.

Ford and the UAW have been arguing that the industry needs only temporary protection, while it goes through the transition to smaller and more efficient cars. Without protection, they fear, the American companies will lose such a large share of the American market that they will have a severely diminished prospect of profits even after the transition. The costs of this transition are unprecedented in American industrial history. Of the four big companies, only General Motors clearly has the financial strength to accomplish it unaided. American Motors, now partly owned by Renault, will depend on French resources. Chrysler depends on the U.S. Treasury. Of the four, Ford faces the widest uncertainties, and that's why Ford is leading the political campaign for protection.

With quotas holding down Japanese imports, Ford argues, it will be able to raise capital more easily and the transition will be speeded. But against that possibility the Reagan administration will have to weigh the certainty that quotas would lead to higher prices. It will also observe that in other industries -- steel is an example -- temporary protection has generally led not to efficiency and great competitiveness, but to further pleas for further temporary protection.

Whether the resolution is passed or not, the Reagan administration will have to develop -- rapidly -- its own heat-resistant policy on imported automobiles. As Mr. Reagan suggested during the campaign, economic strength is not achieved by shutting out the competition.